ASX-listed WiseTech Global’s ongoing M&A spree continues with the US$414 million (A$602m) acquisition of US rail logistics company Blume Global.
The deal comes just three weeks after Sydney-headquartered cargo software behemoth announced it was acquiring US logistics management software startup Envase for US$230 million (A$327m).
WiseTech’s billionaire founder and CEO, Richard White, also snapped up recently delisted data services company Kyckr in a deal is worth around $43.5 million last month via his personal investment vehicle RealWise KYK AV.
Blume is being acquired from funds managed by Apollo, EQT and other minority shareholders.
Blume has a core capability in direct data connections for rail transport in North America where its customers include 6 of the 7 Class 1 US railroads. It also extends WiseTech’s presence in land-side logistics, one of the company’s six key development priority areas for its product, CargoWise.
The latest buy comes as part of a concerted push into the US logistics market by the Australian logistics management software business.
WiseTech Global (ASX:WTC) expects to fund the transaction via a combination of US$134.8 million from existing cash reserves, US$155 million of debt from new facilities and US$124.2 million new WiseTech Global shares issued to the vendors – a funding mix of 70% cash and 30% WiseTech Global shares.
One-off transaction costs of around US$10 million will be funded from existing cash reserves. WiseTech expects to have available liquidity of approximately A$400 million from existing cash reserves and undrawn debt facilities after the deal is completed.
Blume manages intermodal containers and chassis on behalf of 6 of the 7 Class 1 US railroads, ocean carriers and other intermodal equipment providers including global freight forwarders and Beneficial Cargo Owners (BCOs).
The business is expected to generate FY24 revenues in the range of US$65 million to US$70 million representing annual growth of 45% to 55%. Before its integration into WiseTech, Blume expects to achieve FY24 EBITDA margins of approximately 10% and be cash flow breakeven by the end of FY24.
Richard White said the Blume deal is another strategically significant acquisition following on from Envase Technologies last month.
“It further extends our capability in one of our six key CargoWise development priority areas, integrating rail into our landside logistics offering in North America, the most complex and largest logistics region in the world,” he said.
“Blume also brings significant new talent, a portfolio of other valuable product capabilities, and further enhances our product development skill set. This transaction demonstrates WiseTech’s continued investment in its CargoWise ecosystem, improving visibility and process efficiencies end-to-end across the supply chain for our customers.”
Blume CEO Pervinder Johar said: “Joining the WiseTech Global group means greater scale and resources to make logistics processes more productive, agile, dependable, and sustainable with innovative execution and visibility solutions.”
The acquisition needs US regulatory approval and is expected to be completed by April.
White and the WiseTech team will deliver more details on the company’s plans and performance in the company’s half year earnings briefing on February 22.
WiseTech’s share dipped in opening trade on Friday, falling below $58 to $57.12, but remains up more than 16% for the year to date.